Bitcoin prices recover after Chinese bank imposed new restrictions

Prices for the volatile virtual currency Bitcoin leaped in China on Thursday, after falling nearly 50 percent one day earlier due to new restrictions reportedly imposed by the central bank.

On Thursday afternoon, Bitcoins were trading at 2,900 yuan ($478) each on China’s biggest trading platform BTC China, up more than 40 percent from an intra-day low of 2,011 yuan on Wednesday.

But despite the recovery the Bitcoin price in China lagged well behind those on major global exchanges. Price differences between them are usually small.

Bitcoins were trading at $586 each on Japan’s Mt. Gox and being quoted at $549 on UK-based BitStamp, data from their respective websites showed.

The volatile trading in China came after BTC China and its Chinese counterpart OKCoin on Wednesday stopped taking yuan deposits following a ban reportedly imposed by the central bank.

Domestic third-party payment companies were barred from providing clearing services for virtual currency trading platforms, state-run media have reported, adding the instruction was given at a closed-door meeting.

Two weeks ago the People’s Bank of China, the central bank, ordered financial institutions not to provide Bitcoin-related services and products and cautioned against its potential use in money-laundering.

Bitcoin, invented in the wake of the global financial crisis by a mysterious computer guru using the pseudonym Satoshi Nakamoto, is a form of cryptography-based e-money.
It can be stored either virtually or on a user’s hard drive, and offers a largely anonymous payment system.

But Beijing keeps a tight grip on the yuan and enforces capital controls, which are threatened by the very nature of the e-currency.